What People Are Saying About Twitter’s IPO

Twitter’s own tweet that it confidentially filed paperwork for an IPO set off a barrage of coverage (much of it via, well, tweets) that explored whether the seven-year-old microblogging service is ready for the publicly traded stage.

The initial blast of attention focused on two areas: “How much is Twitter worth?” and “What in holy heck is a confidential S-1?” (The latter question made it more difficult to answer the former.) In the next hours, other smart thoughts emerged about Twitter’s business and the timing of its offering.

Here are four good themes:

Shhhhh. It’s a Secret.

There’s no getting around this part of the news. Twitter chose to file confidentially under a provision of the Jumpstart Our Business Startups, or JOBS, Act. It allows companies with less than $1 billion in revenue (or a type of debt) to file with the Securities and Exchange Commission.

Filing confidentially can keep a company’s financial and strategic plans away from the prying eyes of competitors. It also can benefit companies that are reluctant to tip their hand at intentions to go public.

Few companies have stiff-armed the “going public” question like Twitter. Meanwhile, companies are availing themselves of this JOBS Act opportunity, the data show. Why not? One knock on secrecy is that it might hide something about the operations. What is the business afraid to show?

For a company as well understood as Twitter, the business is out there. Given the option, a long-awaited filing minus intense financial scrutiny from the Edgar-searching denizens of the the Internet sounds like a sweet formula. Remember Groupon. Or Mark “Don’t Take IPO Advice From Me” Zuckerberg.

Maybe this is better summed up in a tidy, sarcastic 140 characters.

Confidential S1s? But what could be wrong with releasing 100s of pages of new financial and strategic co. info to the Internet while gagged?

Circle (Insert Date Here) on Your Calendar.

Twitter isn’t going to spend months wandering in the post-filing desert. It’s goal is to sneak up to the gate and bust through as fast as possible. Dan Primack at Fortune said it last night:

Twitter would expect to launch its road-show exactly 21 days after the S-1 is filed, which would be its minimum waiting period (some companies wait months, if not years). In other words, this is designed to be 2013 offering rather than a 2014 offering.

How could Twitter get to the finish line so soon? Zachary Seward at Quartz has a detailed construction of how Twitter is already looking to “rip the bandage of as soon as possible.”

Part of the reason Twitter can speed up the timeline is that, in a certain sense, its road show has already begun. The JOBS Act allows qualifying companies to “test the waters” regarding an IPO by talking to large investors and gauging their interest. Usually, that kind of chatter is strictly forbidden. Twitter has been taking advantage of the new law to feel out hedge funds and institutional investors that could buy large stakes in the IPO, the source said, showing them financial statements and other information that the rest of the public will see later.

Twitter doesn’t want to turn its roadshow into a sideshow. It doesn’t need to post flyers in the residence hall hoping people show up. Wall Street has been watching Twitter for years. Note, Twitter nailed the timing. John Koetsie at VenutreBeat writes in a piece with a mic-drop headline:

But what really caused the problem was that Facebook IPO’d too late in its company’s life cycle, primarily due to CEO Mark Zuckerberg’s notorious dislike of public markets, public disclosures, and public pressures to perform. That meant the company’s biggest growth days were already behind it — a major warning sign for investors. To compound that mistake, Facebook eventually went public during a seasonal downturn for its all-important ad business. Twitter didn’t make either of those seminal mistakes.

How Much for That Social Network in the Window?

The biggest question for Wall Street is the valuation, which has been steadily climbing. Earlier this year, one of Twitter’s investors pegged it at $10.5 billion. Jeff Robers and Om Malik at GigaOm have it at about $14 billion:

Sources familiar with Twitter’s thinking tell us the company has recently received bids from hedge funds offering to buy shares in the company from employees and investors for between $26 and $28 a share, which would value Twitter at $14 billion. The company has raised just under $1 billion in funding over the last several years as it has grown into one of the most ubiquitous fast-twitch communication networks of our time. Until now, Twitter’s stock has been trading on the secondary market for between $18 to $22 a share, according to a source.

I Don’t Even Know Who You Are Anymore.

Step 1: Become indispensable to millions of people. Step 2: Introduce a business model and pray and brace for the backlash. What will the service will look like in a year? This is the playbook Twitter’s user base should care about most.

Matt Buchanan at the New Yorker traces Twitter’s evolution from a text service to a rich experience of photos and Vine videos to app-like tweets that include related headlines. The stream is a raging river, he says. What’s coming next is an overhaul of the experience on mobile, with Apple’s reboot of iOS as a catalyst. His reporting:

Then, sometime later, Twitter will unveil a new iPhone app that, like many other new apps, will match the iOS 7’s creative direction: it will look cleaner and feel more alive. For instance, in the redesigned app, according to a source, Twitter will dispense with its hallmark menu—four buttons at the bottom of the screen—which lets users toggle between different sections of the service: Home, Connect, Discover, and Me. Instead, users will swipe from stream to stream to stream. The streams themselves will be both airier and more immersive, consuming more of the screen; they will show more content and less interface.

The visually rich bounty of the “Discover” tab will be folded into the core Twitter experience. And that will present a richer place for advertisers. John Herrman at Buzzfeed writes:

But not just any ads. Twitter, a company that could have easily gone public years ago, waited until it had a type of ad that was truly its own. A type of ad that at least has the possibility of making real money, rather than just a lot of money, and the type of ad that nobody else could really sell. It had to monopolize something, and it did.

Twitter’s pitch to advertisers: We’ve built the go-to place when people are following specific events, and we’ve given you a way to reach them in real-time with an ad that looks and feels like the product they love. That’s powerful — especially the guaranteed audience part.

Think about it: Aside from the Super Bowl, how many guaranteed audiences are there a year? A handful of well-liked dramas on AMC or so. But nothing as unique as the bumrush of attention on “Sharknado.” And that’s just old-school thinking in terms of appointment television. Now ads can be sold against non-traditional events like the iPhone launch or a power outage.

Will ads alienate the customer? Herrman doesn’t think so:

And yes, there will be more ads, but they will feel familiar. They will become more and more like tweets from the people you follow, and will more closely follow the subjects they’re tweeting about. Twitter will also create the first modern way to invest directly in news volume. Twitter will sell more ads during big news and media events, a fact that will not be lost of Twitter’s potential investors. And you can only imagine the boiler-room stock pitches to retail investors.

Now it’s your turn. Share your thoughts on Twitter in the comments field below. And if you’ve seen good posts or articles on the subject, share those, too.